"Acquiring the team" usually means the investors make their money back, maybe with a small return.
In some cases they received Facebook shares. Eg, FriendFeed sold to Facebook in return for Facebook shares. Obviously they are quite happy now with the deal that they made!
With something like friendfeed there may be IP issues that may force a buyout, but what about cases (like TeachStreet/Amazon) where the acquirer may prefer to just hire and pay the engineering / management talent, and not pay a chunk to the investors? Do investors have any recourse? Will they change the way they write term sheets to protect themselves in the future
In some cases they received Facebook shares. Eg, FriendFeed sold to Facebook in return for Facebook shares. Obviously they are quite happy now with the deal that they made!